What is gross profit?

Gross profit (definition)

Gross profit is the money you have left after paying for the things you sold to customers.

You don’t get to keep gross profit. You still need to pay other operating expenses and taxes from this pot of money.

Gross profit formula shows that revenue minus the cost of goods or services sold equals gross profit.

Gross profit is what’s left after paying for the things you’ve sold to customers

Gross profit tells you how much money you made on sales. The higher it is, the more money you have to cover operating expenses like office supplies, rent, and loan repayments. And the more chance you have of generating net profit. Gross profit appears on your profit and loss statement.

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Disclaimer: This glossary is for small business owners. The definitions are written with their requirements in mind. More detailed definitions can be found in accounting textbooks or from an accounting professional. Xero does not provide accounting, tax, business or legal advice.